San Diego’s Genomatica Inks Development Deal for “Bio Butadiene”

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Genomatica, the San Diego industrial biotech, and the Brazilian petrochemical company Braskem have agreed to work together to commercialize technology needed to produce bio-based butadiene—one of the key chemicals needed to make tires.

According to a joint statement yesterday, Braskem would provide “significant” but undisclosed funding over several years for Genomatica’s work to develop processes for producing butadiene from bacteria. Braskem also agreed to provide R&D resources and to fund the construction and operation of a pilot and demonstration-scale butadiene production plants.

Genomatica agreed to grant Braskem certain exclusive licensing rights to use the resulting process technology in the Americas. Genomatica also would get fees and royalties for each licensed commercial plant. Worldwide demand for butadiene amounts to more than 20 billion pounds a year, according to Genomatica. Butadiene is not only a key ingredient needed to make rubber for tires. It is also used in electrical appliances, footwear, plastics, asphalt modifiers, and additives for lubricating oil, pipes, building components, and latex.

Earlier this year, Genomatica said it had reached a similar joint development and licensing agreement to produce bio-butadiene with Versalis, Italy’s largest chemical company. As a result of the agreements with Braskem and Versalis, Genomatica says it will have access to all of the world’s major butadiene markets.

Taken together, the Braskem and Versalis deals also mark the second step in Genomatica’s long-term strategy, using its core technology to develop bio-based processes for producing a series of high-value industrial chemicals. Genomatica already has proven the feasibility of making 1,4-butanediol (BDO), an intermediate industrial chemical usually made from petroleum-based feedstocks, from renewable raw materials like corn syrup and sugar cane.

While butadiene can be produced from either natural gas or naptha (derived from crude oil), the increased production of U.S. shale gas (and plunging costs) has gone mostly to lower the cost and increase production of ethylene—a widely used and basic building-block petrochemical. The result, however, has been tightening supplies of fossil fuel-based feedstocks for butadiene. And that has opened the door for Genomatica, in terms of engineering microbes to produce butadiene from renewable raw materials.

“This is an opportunity driven not by people looking for bio-based sources of butadiene,” Genomatica CEO Christophe Schilling told me by phone. “They’re looking for sources of butadiene—period.”

Genomatica says the butadiene process under development is expected to provide an economically competitive and environmentally-friendlier alternative to petroleum-based feedstocks, and also provides a strategic alternative to U.S. dependence on foreign sources of oil.